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How long can Bernanke keep up the juggling act?

Business Times - 02 Mar 2010


How long can Bernanke keep up the juggling act?

By LEON HADAR
WASHINGTON CORRESPONDENT

US FEDERAL Reserve chairman Ben Bernanke's semi-annual report on the state of the American economy last week was comforting. He reassured everyone that the economy was slowly getting better.

But, he added, it would take a long time for unemployment to start edging down and thus the Fed had to keep interest rates low to help keep the economy going for a while longer. Bravely, he also said that the Fed would prepare to exit from this period of loose monetary policy.

Mr Bernanke's comments during the Congressional hearings on Wednesday and Thursday underlined the need for the Fed to juggle its two primary but conflicting mandates - maximising employment and keeping prices stable.

With America's unemployment rate hovering around 9.7 per cent, leaving 14 million people unemployed - nearly half of the unemployed have been out of work for at least six months - Congres…